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What Bizarro Bogle's world might look like

Or, of whooping cranes and 2 and 20

In the Superman mythos, there's a villain named Bizarro Superman that possess all of the same powers as Superman, but uses them for evil instead of good.

At a luncheon in New York Thursday honoring John Bogle, founder of the Vanguard Group Inc. and investing Superman, James Grant, editor of Grant's Interest Rate Observer, imagined what the world would look like if a Bizarro Bogle took the place of the real Mr. Bogle.

Imagine a child growing up in the Great Depression who forgets his lunch money on the dinner table one day and is scolded by his mother for it. “Don't leave money on the table!” she says. Those words would stick with Bizarro Bogle for the rest of his life, in Mr. Grant's alternate universe.

With that thought in mind, Bizarro Bogle is inspired to write his senior thesis on hedge funds instead mutual funds. “Why settle for 1% when I could get 2 and 20?” Bizarro Bogle muses. And he doesn't stop there. Instead of a single hedge fund structure, why not layer on the fees by using funds of funds?

Fees are all that matter in Bizarro Bogle's world and it leads to him becoming ridiculously rich. Meanwhile, index funds, one of the few financial innovations to truly benefit ordinary investors, are left undiscovered.

Luckily for the countless investors who have benefited from index funds, which Mr. Bogle created in 1976, Mr. Grant's imagination is not reality.

It's hard to say just how tremendous an impact Mr. Bogle has had on ordinary investors.

“We know more about the mating life of the whooping crane than we do about the quantitative impact passive investing has had over the last 30 years,” said Knut Rostad, president and founder of The Institute for the Fiduciary Standard.

Only one person's even tried, Mr. Rostad said, noting that in a study, Kenneth French estimated that index investors saved about $100 billion in fees from 1977 to 2006. But critics of that study complained it was too conservative an estimate, Mr. Rostad said.

In truth, the power of Mr. Bogle's legacy exceeds any dollar amount.

“The financial industry is short on heroes,” said Alan Blinder, Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University. “But John Bogle is one of the few.”